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Growth and Risk-Sharing with Private Information

Aubhik Khan () and B Ravikumar

Macroeconomics from University Library of Munich, Germany

Abstract: We examine the impact of incomplete risk-sharing on growth and welfare. The source of market incompleteness in our economy is private information: a household's idiosyncratic productivity shock is not observable by others. Risk-sharing between households occurs through long-term contracts with intermediaries. We find that incomplete risk- sharing tends to reduce the rate of growth relative to the complete risk sharing benchmark. Numerical examples indicate the contracts are relatively efficient and that the growth effects of private information are small.

Keywords: growth; long-term contracts; risk-sharing (search for similar items in EconPapers)
JEL-codes: E (search for similar items in EconPapers)
Pages: 31 pages
Date: 1998-02-04
Note: Type of Document - PDF; prepared on Acrobat PDF; pages: 31 ; figures: included
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Related works:
Journal Article: Growth and risk-sharing with private information (2001) Downloads
Working Paper: Growth and risk-sharing with private information (1999) Downloads
Working Paper: Growth and Risk-Sharing with Private Information (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:9802003

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